DEVELOPERS CALL FOR MORE PRACTICAL SUPPORT POLICIES

Real estate developers are advising the government to detail supportive measures for the sector after Directive No.11/CT-TTg dated March 4 on urgent objectives and solutions for assisting businesses facing difficulties and assurance of social welfare amid the COVID-19 pandemic was issued.

According to Nguyen Quang Tin, financial director of Development Investment Construction JSC, as the real estate market is currently devastated by the epidemic, the government should issue strong financial supporting policies to help real estate investors and developers to overcome this difficult time.

The government has issued a package of VND250 trillion ($10.87 billion) to support enterprises via the banking system, however, the business community is still waiting for detailed guidelines.

“Singapore’s government has issued financial support policies to enterprises, such as refunding a part of the income tax or giving tax relief and helping enterprises approach bank loans. Similar support measures would be very useful for us,” Tin said.

He added that policies to support enterprises must be synchronised for both enterprises and banks, since banks that are giving loans to developers should also be supported.

Meanwhile, Ngo Quang Phuc, general director of Phu Dong Group, said that to date, many developers have been running short on finances as they have been relying on revenue gained from previous years.

“The epidemic was an unexpected blow – it came as a shock to the market and froze our business,” Phuc said. “We suggest some financial incentives such as tax relief for developers, especially those in the hospitality sector, which has suffered the largest impact from the outbreak. They would react well to a 50 per cent reduction in VAT, corporate income tax, and import tax, while it would also go a long way if they reduced personal income tax for tourism workers based on the damage from the disease.”

“If the pandemic cannot be contained in the next few months, many developers will go bankrupt,” Phuc explained.

Kevin Hawkins, co-executive partner of ZICO Law Vietnam, told VIR that Vietnamese leaders should consider instructing the State Bank of Vietnam to adjust interest rates applied to real estate projects in the resort and retail segments as well as other segments which have also been adversely affected, to help lower investor losses.

“Moreover, the government should also encourage developers to restructure the payment schedules for residential projects to allow buyers more time to make payments, and delay land lease payments to help projects which have leased land arrangements,” Hawkins added.

The Ho Chi Minh City Real Estate Association (HoREA) suggested the government to forego five months of VAT and social insurance, and defer payments on credit loans.

HoREA chairman Le Hoang Chau said that proposals included halving land lease tax for real estate developers in 2020 and 2021 and extending the tax payment deadline until the second half of this year.

According to Nguyen Trong Ninh, head of the Housing and Real Estate Market Management Department under the Ministry of Construction (MoC), the ministry is building a special package for the real estate sector in tandem with the new government directive.

Even though figures in the package are not yet fixed, Ninh said the MoC is asking the government to pump more capital into the social and affordable housing segments.

“The MoC will propose the State Bank of Vietnam to compensate the difference in interest rates for social housing loans granted by commercial and social banks. This will help reduce interest rates provided to homebuyers,” said Ninh.

Former Deputy Minister of Natural Resources and Environment Dang Hung Vo, meanwhile, suggested competent bodies to support the dozens of thousands of realtors who were dismissed due to the downturn of the real estate market.

The Vietnam National Real Estate Association reported that around 500 transaction centres were closed in the first two months of this year.

Meanwhile, some local banks earlier this month adjusted interest rates for homebuyers with more flexible packages.

Some banks are expanding the loanable margin to up to 90 per cent of the assets’ value, from the previous rate of 70 per cent. Lending terms were also increased to a maximum of 35 years (with certain conditions) from the previous 20 years.

PVcomBank is one of the first lenders offering a financial package of VND10.5 trillion ($456.5 million) with interest rates from 7.49 per cent for manufacturing, consumption, car purchase, and house purchase to support enterprises and individual buyers during the pandemic.

Source: VIR